Fresh controversy is looming over Stephen Byers after it emerged the 'resignation' of his media chief cost the taxpayer nearly £200,000 in compensation.

The transport secretary was already facing new calls to quit after it was admitted on Tuesday that he mistakenly announced the resignation of his communications director, Martin Sixsmith, back in February.

Attention is now focusing on the payout to Mr Sixsmith - who says he first heard about his resignation on the radio - which will be funded by the taxpayer.

Sixsmith struck a deal with the transport department

It is the latest twist in the controversy that began with the infamous e-mail sent by transport department spin doctor Jo Moore about burying bad news after the 11 September attacks.

Following a publicised row between her and Mr Sixsmith, who feared Ms Moore may repeat the gaffe on the day of Princess Margaret's funeral, it was announced the pair had resigned.

The transport secretary announced both resignations on 15 February and made a Commons statement repeating it 11 days later.

But three months on the transport department had to admit the resignation announcement concerning Mr Sixsmith had been "incorrect".

Contract terminated

Tuesday's statement said: "The department regrets that, while acting in good faith, they announced that he had resigned on what turned out to be an incorrect understanding of earlier discussions that day."

No details of any financial pay-off for the public relations chief were mentioned in the text, but it added that Mr Sixsmith's contract would finish "by mutual agreement at the end of May".